ASSET PURCHASE AGREEMENT

by and between

ASURE SOFTWARE, INC.

and

PAYROLL SPECIALTIES N.W., INC.

and

SHAWN GREGG

Dated as of January 1, 2017

 

		Page
SECTION I. DEFINITIONS		1
SECTION II. SALE AND PURCHASE OF ASSETS AND CLOSING		8
2.1	Sale and Purchase.	8
2.2	Excluded Assets.	10
2.3	Purchase Price.	11
2.4	Purchase Price Adjustment.	11
2.5	Allocation of Purchase Price.	13
2.6	Assumption of Seller Liabilities.	13
2.7	Excluded Liabilities.	13
2.8	Closing.	15
2.9	Proration of Expenses.	15
SECTION III. REPRESENTATIONS AND WARRANTIES OF SELLER		15
3.1	Organization and Qualification.	15
3.2	Authority.	15
3.3	No Conflicts; Consents.	16
3.4	Financial Statements.	17
3.5	Undisclosed Liabilities.	17
3.6	Custodial Accounts.	17
3.7	Absence of Certain Changes, Events and Conditions.	18
3.8	Customer Accounts and Billings.	20
3.9	Title to Purchased Assets; Real Property	20
3.10	Condition and Sufficiency of Purchased Assets.	20
3.11	Inventory.	20
3.12	Accounts Receivable.	21
3.13	Material Contracts.	21
3.14	Intellectual Property.	22
3.15	Customers and Suppliers.	24
3.16	Insurance.	25
3.17	Legal Proceedings; Governmental Orders.	25
3.18	Compliance With Laws; Permits.	26
3.19	Environmental Matters.	26
3.20	Employment Matters.	27
3.21	Employee Benefit Matters.	28
3.22	Service Warranties.	29
3.23	Taxes.	29
3.24	Finders’ Fees.	30
3.25	Computer Systems.	30
3.26	Privacy and Data Security.	31
3.27	Completeness.	31
SECTION IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER		32
4.1	Organization.	32
4.2	Authority.	32

		Page
4.3	No Conflicts; Consents.	32
4.4	Litigation.	32
4.5	Finders’ Fees.	32
SECTION V. CLOSING DELIVERABLES		33
5.1	Deliveries to be Made by Seller at Closing.	33
5.2	Deliveries to be Made by Purchaser at Closing.	33
SECTION VI. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATIONS		34
6.1	Survival of Representations and Warranties.	34
6.2	Indemnification by Seller.	34
6.3	Indemnification by Purchaser.	35
6.4	Materiality.	36
6.5	Indemnification Procedures.	36
6.6	Payments; Offset and Holdback from Note.	38
6.7	Tax Treatment of Indemnification Payments.	38
6.8	Effect of Investigation.	38
6.9	Cap.	38
6.10	Cumulative Remedies.	39
SECTION VII. COVENANTS AND AGREEMENTS		39
7.1	Transition Services Agreement.	39
7.2	Employee Matters.	39
7.3	Confidentiality, Non-Competition, Non-Solicitation and Non-Interference.	40
7.4	Audit Cooperation.	42
7.5	Collection of Account Receivables.	42
7.6	Books and Records.	43
7.7	Public Announcements.	43
7.8	Satisfaction of Excluded Liabilities.	43
7.9	Name Change; Name Usage.	43
7.10	Maintenance of Existence.	44
7.11	Further Assurances.	44
SECTION VIII. MISCELLANEOUS		44
8.1	No Waiver.	44
8.2	Successors and Assigns.	44
8.3	Governing Law; Jurisdiction; Waiver of Jury Trial.	44
8.4	Expenses; Transfer Taxes.	45
8.5	Notices.	45
8.6	Counterparts.	46
8.7	Announcements and Communications.	46
8.8	Entire Agreement.	46

		Page
8.9	Delays or Omissions.	46
8.10	Severability.	47
8.11	Time; Captions; Exhibits and Schedules.	47
8.12	Construction.	47
8.13	Third Party Beneficiaries.	47
8.14	Specific Performance.	47

 

 

 

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made as of the 1st day of January, 2017, by and between Asure Software, Inc., a Delaware corporation (“Purchaser”), Payroll Specialties N.W., Inc., an Oregon Corporation (“Seller”), and Shawn Gregg, individually (“Seller Principal”).

WITNESSETH:

WHEREAS, Seller is a provider of outsourced payroll and other ancillary human resources services (the “Business”), with its principal place of business at 2300 Oakmont Way, Suite 102, Eugene, OR 97401 (the “Business Premises”);

WHEREAS, Seller Principal is the sole shareholder of Seller as well as Seller’s President and the sole member of Seller’s board of directors;

WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, substantially all the assets and certain specified liabilities of the Business, subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

SECTION I. 
DEFINITIONS

The following terms used in this Agreement have the meanings set forth in this Section 1:

 “Accounts Receivable” has the meaning set forth in Section 2.1(a).

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the preamble.

“Assigned Contracts” has the meaning set forth in Section 2.1(h).

“Assigned Customer Accounts” has the meaning set forth in Section 2.1(e).

“Assignment and Assumption Agreement” has the meaning set forth in Section 5.1(c).

“Assumed Liabilities” has the meaning set forth in Section 2.6.

“Audit Representation Letter” has the meaning set forth in Section 7.4.

“Benefit Plan” has the meaning set forth in Section 3.21(a).

“Bill of Sale” has the meaning set forth in Section 5.1(b).

“Business” has the meaning set forth in the recitals.

“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in New York, New York are authorized or required by Law to be closed for business.

“Business Premises” has the meaning set forth in the recitals.

“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

“Closing” and “Closing Date” have the meanings set forth in Section 2.8.

“Closing Day Cash Payment” has the meaning set forth in Section 2.3(a).

“Closing Net Working Capital” means: (a) the Current Assets of Seller exclusive of any Excluded Assets which are Current Assets, less (b) the Current Liabilities of Seller exclusive of any Excluded Liabilities which are Current Liabilities, determined as of the close of business on December 31, 2016.

“Closing Net Working Capital Statement” has the meaning set forth in Section 2.4(a)(i).

 “Code” means the Internal Revenue Code of 1986, as amended.

“Commitments” has the meaning set forth in Section 2.1.

“Computer System” means any of or combination of the computer software, computer hardware (whether general or special purpose), telecommunications capabilities (including voice, data or video networks) and other similar or related items of any automated, computerized or software system and any other network or system or related service that is used by or relied on by Seller in the conduct of its business.

“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

“Current Assets” means Seller’s current assets, including cash and cash equivalents, accounts receivable, including amounts billed to customers after December 31, 2016 for payroll processing and other services provided on or before December 31, 2016, inventory and prepaid expenses, but excluding (a) any current assets that are part of the Excluded Assets, (b) the portion of any prepaid expense of which Purchaser will not receive the benefit following the Closing, (c) deferred Tax assets and (d) receivables from any of Seller’s Affiliates, directors, employees, officers or stockholders and any of their respective Affiliates, determined in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.

“Current Liabilities” means Seller’s current Liabilities other than those retained by Seller and not being assumed by Purchaser, determined in accordance with GAAP, applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Financial Statements for the most recent fiscal year end as if such accounts were being prepared and audited as of a fiscal year end.

 “Custodial Accounts” has the meaning set forth in Section 3.6.

“Customer Accounts” has the meaning set forth in Section 3.8.

“Constructive Knowledge” means knowledge a Person does not actually have, but is presumed to have because it would have been obtainable by such Person through reasonable investigation.

“Direct Claim” has the meaning set forth in Section 6.5(c).

“Disclosure Schedules” or “Disclosure Schedule” means the Disclosure Schedules, or any one of them, delivered by Seller concurrently with the execution and delivery of this Agreement.

“Disputed Amounts” has the meaning set forth in Section 2.4(b)(iii).

 “Encumbrance” means any charge, claim, community property interest, pledge, usufruct, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement

proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority:  (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

“Environmental Notice” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“Excluded Assets” has the meaning set forth in Section 2.2.

“Excluded Liabilities” has the meaning set forth in Section 2.7.

“Financial Statements” has the meaning set forth in Section 3.4.

“Goodwill” has the meaning set forth in Section 2.1(n).

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Gregg Non-Compete Agreement” has the meaning set forth in Section 5.1(f).

“Hazardous Materials” means:  (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

“Holdback Amount” has the meaning set forth in Section 6.6.

“Indemnitee” has the meaning set forth in Section 6.5.

“Indemnifying Party” has the meaning set forth in Section 6.5.

“Independent Accountants” means the office of a regional or nationally recognized firm of certified public accountants, other than Seller’s Accountants or Purchaser’s Accountants, selected by mutual agreement of Seller and Purchaser.

“Insurance Policies” has the meaning set forth in Section 3.16.

“Intellectual Property Assignments” has the meaning set forth in Section 5.1(d).

“Intellectual Property Licenses” has the meaning set forth in Section 3.14(e).

“Intellectual Property Registrations” has the meaning set forth in Section 3.14(c).

“Interim Balance Sheet” has the meaning set forth in Section 3.4.

“Interim Balance Sheet Date” has the meaning set forth in Section 3.4.

“Knowledge of Seller” or “Seller’s Knowledge” or any other similar knowledge qualification, means the actual or Constructive Knowledge of any director or officer of Seller.

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“Lease Agreement” means that certain Lease Agreement dated March 1, 2016, by and between Seller (as tenant) and McKay Investment Company, LLC (as landlord) with respect to the Business Premises, and all amendments, modifications, extensions and renewals thereof.

“Liabilities” has the meaning set forth in Section 3.5.

“Licensed Intellectual Property” has the meaning set forth in Section 3.14(a).

“Losses” has the meaning set forth in Section 6.2.

“Malicious Instructions” has the meaning set forth in Section 3.25(b).

“Material Adverse Effect” means any event, occurrence, condition, fact or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to the business, results of operations, prospects, condition (financial or otherwise) or assets of Seller.

“Material Customers” has the meaning set forth in Section 3.15(a).

“Material Suppliers” has the meaning set forth in Section 3.15(b).

“Net Working Capital Adjustment” has the meaning set forth in Section 2.4(a)(ii).

 “Offset Obligation” has the meaning set forth in Section 6.6.

“Ordinary Course of Business” means an action taken by a Person only if such action (i) is consistent in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of, or incidental to, the normal day-to-day operations of such Person and (ii) does not require authorization by the board of directors or shareholders or members of such Person and does not require any other separate or special authorization of any nature.

“Owned Intellectual Property” has the meaning set forth in Section 3.14(a).

“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity, whether domestic or foreign.

“Personally Identifying Information” means a Person’s first name or first initial and last name in combination with any one of the following pieces of information for such Person:  (i) Social Security number; (ii) Driver license number or state identification card number issued by the Department of Transportation; (iii) Passport number or other United States issued identification number; or (iv) Financial account number, credit card number, or debit card

number, in combination with any required security code, access code, or password that would permit access to a consumer’s financial account.

“Proprietary Information Technology System” means a Computer System (or portion of Computer System) that Seller (either directly or through or with any other Person) has developed, customized or enhanced or is in the process of developing, customizing or enhancing.

“Purchase Price” has the meaning set forth in Section 2.3.

“Purchased Assets” has the meaning set forth in Section 2.1.

“Purchaser” has the meaning set forth in the preamble.

“Purchaser Ancillary Agreement” or “Purchaser Ancillary Agreements” has the meaning set forth in Section 4.2.

 “Purchaser Indemnitees” has the meaning set forth in Section 6.2.

“Purchaser’s Accountants” means Markum LLP.

“Purchaser’s Knowledge” or any other similar knowledge qualification, means the actual or Constructive Knowledge of any director or officer of Purchaser.

“Qualified Benefit Plan” has the meaning set forth in Section 3.21(c).

“Real Property” means the real property leased by Seller pursuant to the Lease Agreement, together with all buildings, structures and facilities Seller has a right to under the Lease Agreement.

“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

“Resolution Period” has the meaning set forth in Section 2.4(b)(ii).

“Retained Cash” has the meaning set forth in Section 2.1(p).

“Review Period” has the meaning set forth in Section 2.4(b)(i).

“Seller” has the meaning set forth in the preamble.

“Seller’s Accountants” means Richard Duncan of Duncan and Duncan CPAs, LLC, with an address of P.O. Box 70287, Springfield, Oregon.

“Seller Ancillary Agreement” and “Seller Ancillary Agreements” has the meaning set forth in Section 3.2(a).

 “Seller Fundamental Representations” shall have the meaning set forth in Section 6.1.

“Seller Indemnitees” has the meaning set forth in Section 6.3.

“Seller Intellectual Property” has the meaning set forth in Section 3.14(a).

“Seller Principal” has the meaning set forth in the preamble.

“Software and Technology” has the meaning set forth in Section 3.14(b).

“Standard Terms and Conditions” has the meaning set forth in Section 3.22.

“Statement of Objections” has the meaning set forth in Section 2.4(b)(ii).

 “Tangible Personal Property” has the meaning set forth in Section 2.1(c).

“Target Net Working Capital” means $180,000.00.

 “Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, value added, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Third Party Claim” has the meaning set forth in Section 6.5(a).

“Transition Services Agreement” has the meaning set forth in Section 7.1.

“Union” has the meaning set forth in Section 3.20(b).

SECTION II. 
SALE AND PURCHASE OF ASSETS AND CLOSING

Business, other than the Excluded Assets (collectively, the “Purchased Assets”), including without limitation, the following:

Anything herein to the contrary notwithstanding, this Agreement and any instrument executed pursuant hereto shall not constitute an assignment of any claim, contract, license, lease, purchase order, or other commitment included in the Purchased Assets (collectively, the “Commitments”) if an attempted assignment or transfer of the same without the consent of (i) the other party thereto, (ii) the applicable Governmental Authority, or (iii) any other Person, would be ineffective or would constitute a breach or violation thereof so that Purchaser would not in fact receive all of the rights and benefits of  Seller or such other assigning party thereunder.  If by the Closing Date any such consent has not been obtained, Seller shall after the Closing use its reasonable efforts to provide for the Purchaser the benefits under any such Commitment without such arrangement causing a breach or violation of such Commitment.  If Seller or such other assigning party is unable to obtain such consent to any transfer or assignment of an Assigned Contract, Seller shall so indicate as to each such Assigned Contract on Schedule 2.1(h) hereto, such inability shall not constitute or be deemed to be a breach of any provision of this Agreement, and Seller and Purchaser shall work together and reasonably cooperate following Closing to obtain such consents.

“Closing Day Cash Payment”).  The Closing Day Cash Payment shall be paid at Closing by wire transfer of immediately available funds to the account specified by Seller in writing; and

(i)

Within thirty (30) days following completion of Purchaser’s post-closing audit of the Business as contemplated in Section 7.4, Purchaser shall prepare and deliver to Seller a statement setting forth its calculation of the Closing Net Working Capital (the “Closing Net Working Capital Statement”), which shall be final and binding on the parties, subject to Section 2.4(b).

(ii)

The “Net Working Capital Adjustment” shall be an amount, which may be positive or negative, equal to the Closing Net Working Capital, as determined in the Closing Net Working Capital Statement upon its acceptance by Seller or the resolution of any Disputed Amounts pursuant to Section 2.4(b), minus the Target Net Working Capital.

(iii)

If the Net Working Capital Adjustment is a positive number, the face amount of the Note shall be increased by such amount, up to a total face value of Seven Hundred Fifty Thousand Dollars ($750,000.00), with any amount in excess of $750,000.00 to be paid by Purchaser by wire transfer of immediately available funds. If the Net Working Capital Adjustment is a negative number, the face amount of the Note shall be decreased by such amount, with any amount in excess of the face amount of the Note to be paid by Seller by wire transfer of immediately available funds.

(iv)	Payment of the Net Working Capital Adjustment, if any, shall be due within five (5) Business Days of (i) acceptance by Seller of the Closing Net Working Capital Statement, or (ii) if there are any Disputed Amounts, resolution of such dispute pursuant to Section 2.4(b).

(i)

Examination.  Seller shall have thirty (30) days after receipt of the Closing Net Working Capital Statement (the “Review Period”) to review the Closing Net Working Capital Statement. During the Review Period, Seller and Seller’s Accountants shall have reasonable access to the books and records of Seller, the personnel of, and work papers prepared by, Purchaser and/or Purchaser’s Accountants to the extent that they relate to the Closing Net Working Capital Statement as Seller may reasonably request for the purpose of reviewing the Closing Net Working Capital Statement, to prepare a Statement of Objections (defined below), provided, that such access shall be in a manner that does not interfere with the normal business operations of Purchaser or the Business.

(ii)

Objection. On or prior to the last day of the Review Period, Seller may object to the Closing Net Working Capital Statement by delivering to Purchaser a written statement setting forth Seller’s objections in reasonable detail, indicating each disputed item or amount and the basis for Seller’s disagreement therewith (the “Statement of Objections”). If Seller fails to deliver the Statement of Objections before the expiration of the Review Period, the Closing Net Working Capital Statement and the Net Working Capital Adjustment determined in connection therewith shall be deemed to have been accepted by Seller. If Seller delivers the Statement of Objections before the expiration of the Review Period, Purchaser and Seller shall negotiate in good faith to resolve such objections within thirty (30) days after the delivery of the Statement of Objections (the “Resolution Period”), and, if the same are so resolved within the Resolution Period, the Closing Net Working Capital Statement and the Net Working Capital Adjustment with

such changes as are agreed to in writing by Purchaser and Seller, shall be final and binding.

(iii)

Resolution of Disputes. If Seller and Purchaser fail to reach an agreement with respect to disputed matters set forth in the Statement of Objections before expiration of the Resolution Period, then only those amounts remaining in dispute (the “Disputed Amounts”) shall be submitted for resolution to the Independent Accountants who, acting as experts and not arbitrators, shall resolve the Disputed Amounts only and make any adjustments to the Net Working Capital Adjustment, as the case may be, and the Closing Net Working Capital Statement. The parties hereto agree that all adjustments shall be made without regard to materiality. The Independent Accountants shall only decide the specific items under dispute by the parties and their decision for each Disputed Amount must be within the range of values assigned to each such item in the Statement of Objections. Purchaser and Seller will each pay one-half (1/2) of the fees and expenses of the Independent Accountants.

(iv)

Determination by Independent Accountants. The Independent Accountants shall make a determination as soon as practicable within thirty (30) days (or such other time as the parties hereto shall agree in writing) after their engagement, and their resolution of the Disputed Amounts and their adjustments to the Closing Net Working Capital Statement and the Net Working Capital Adjustment shall be conclusive and binding upon the parties hereto.

pay and remain responsible for all such Excluded Liabilities.  Without limiting the generality of this Section 2.7, the Excluded Liabilities shall include, but not be limited to, the following:

SECTION III. 
REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the correspondingly numbered Disclosure Schedule, Seller and Seller Principal, jointly and severally, represent and warrant to Purchaser that the statements contained in this Section 3 are true and correct as of the date hereof and shall surviving the Closing of the transactions contemplated herein.

Agreement (each, a “Seller Ancillary Agreement” and, collectively, the “Seller Ancillary Agreements”) and to carry out the transactions contemplated hereby and thereby.  The execution, delivery and performance of this Agreement and each Seller Ancillary Agreement by Seller has been duly and validly authorized and approved by all necessary action on the part of Seller and its shareholders and no other action on the part of Seller or its shareholders is required in connection therewith.  This Agreement and each Seller Ancillary Agreement constitutes or, when executed and delivered by Seller, will constitute the legal, valid and binding obligation of Seller, each enforceable in accordance with its respective terms, except to the extent that enforcement is limited by bankruptcy, insolvency, moratorium, conservatorship, receivership or similar Laws of general application affecting creditors’ rights or by the application by a court of equity principles.

(b) The execution, delivery and performance by Seller Principal of this Agreement and each Seller Ancillary Agreement to which Seller Principal is a party does not and will not: (i)

conflict with or result in a violation or breach of any foreign, federal, state, local or other Laws or Governmental Order applicable to Seller Principal; (ii) except as set forth on Schedule 3.3, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract or Permit to which Seller Principal is a party or by which Seller Principal is bound or to which any of Seller Principal’s properties or assets are subject; or (iii) result in the creation or imposition of any Encumbrance on any of the Purchased Assets.  No consent, waiver, approval, authorization, Permit, Governmental Oder, declaration, filing with or notice to, any Governmental Authority is required to be obtained by or with respect to Seller Principal in connection with the execution, delivery and performance of this Agreement and each Seller Ancillary Agreement to which Seller Principal is party and the consummation of the transactions contemplated hereby and thereby.

3.4 Financial Statements.  Seller has delivered to Purchaser complete copies of Seller’s unaudited consolidated financial statements consisting of the consolidated balance sheets of Seller as of December 31, 2015 and October 31, 2016, and the related unaudited consolidated statements of profit and loss for the year ended December 31, 2015, and the ten-month period ended October 31, 2016 (the “Financial Statements”). The Financial Statements have been prepared by management using a cash basis method of accounting in accordance with the method of accounting used to Seller’s federal tax return filings. The Financial Statements are based on the books and records of Seller, and fairly present the consolidated financial position of Seller as of the dates of such Financial Statements. The balance sheet of Seller as of October 31, 2016, is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date.” The books and records of Seller are true, correct and complete in all material respects and accurately present and reflect in all material respects all of the transactions and actions described therein in a manner that is consistent with a cash basis method of accounting. The Financial Statements delivered to Purchaser have also been made available to Purchaser’s Accountants and are consistent with the information provided to Purchaser’s Accountants.

expected to subject Seller or, with respect to any period on or after the Closing Date, Purchaser or any of its Affiliates, to any Actions, Liabilities or Losses of any kind.  The balance of the Custodial Accounts as of the Closing Date is sufficient to fund all payments and other obligations due or to become due in connection therewith.

basis.  The quantities of each item of inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of Seller.

(i)

each Contract involving aggregate consideration in excess of $10,000 specifically including all customer agreements, support agreements, supplier agreements, reseller agreements, referral agreements, hosting agreements, licensing agreements, software development agreements, and agreements relating to the Seller Intellectual Property;

(ii)	all Contracts that require Seller to purchase its total requirements of any product or service from a third party or that contain “take or pay” provisions;

(iii)

all Contracts that provide for the indemnification by Seller of any Person or the assumption of any Tax, environmental or other Liability of any Person;

(iv)	all Contracts that relate to the acquisition or disposition of any business;

(v)	all reseller, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts to which Seller is a party;

(vi)	all employment agreements and Contracts with independent contractors or consultants (or similar arrangements) to which Seller is a party;

(vii)

except for Contracts relating to trade receivables, all Contracts relating to indebtedness (including, without limitation, guarantees) of Seller;

(viii)

except for those Contracts relating to commercially available off-the-shelf items as defined in Subpart 2.101 of the Federal Acquisition Regulations, all Contracts with any Governmental Authority to which Seller is a party;

(ix)	all Contracts that limit or purport to limit the ability of Seller to compete in any line of business or with any Person or in any geographic area or during any period of time;

(x)	any Contracts to which Seller is a party that provide for any joint venture, partnership or similar arrangement by Seller;

(xi)	all Contracts between or among Seller on the one hand and Seller or any Affiliate of Seller (other than Seller) on the other hand; and

(xii)

any other Contract that is material to the operation of the Business or any of the Purchased Assets or Assumed Liabilities, and not previously disclosed pursuant to this Section 3.13.

(i)

trademarks, service marks, trade names, brand names, logos, trade dress and other proprietary indicia of goods and services, whether registered, unregistered or arising by Law, and all registrations and applications for registration of such trademarks, including intent-to-use applications, and all issuances, extensions and renewals of such registrations and applications;

(ii)	Internet domain names, whether or not trademarks, registered in any generic top level domain by any authorized private registrar or Governmental Authority;

(iii)

original works of authorship in any medium of expression, whether or not published, including but not limited to the Software and Technology, all copyrights (whether registered, unregistered or arising by Law), all registrations and applications for registration of such copyrights, and all issuances, extensions and renewals of such registrations and applications;

(iv)	confidential information, formulas, designs, devices, know-how, research and development, inventions, methods, processes, compositions and other trade secrets, whether or not patentable;

(v)

patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications; and

(vi)	all rights to sue and recover and retain damages, costs and attorneys’ fees for past, present and future infringement and any other rights relating to any of the foregoing.

through November 30, 2016 (collectively, the “Material Suppliers”); and (ii) the amount of purchases from each Material Supplier during such periods. Seller has not received any notice, and has no reason to believe, that any of its Material Suppliers has ceased, or intends to cease, to supply goods or services to Seller or to otherwise terminate or materially reduce or alter its relationship with Seller.

(including, without limitation, costs of remediation, pollution control equipment and operational changes).

threatened. Nothing has occurred with respect to any Benefit Plan that has subjected or could reasonably be expected to subject Seller or, with respect to any period on or after the Closing Date, Purchaser or any of its Affiliates, to a penalty under Section 502 of ERISA or to tax or penalty under Section 4975 of the Code. All benefits, contributions and premiums relating to each Benefit Plan have been timely paid in accordance with the terms of such Benefit Plan and all applicable Laws.

SECTION IV. 
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller that the statements contained in this Section 4 are true and correct as of the date hereof and shall survive the Closing of the transactions contemplated herein.

SECTION V. 
CLOSING DELIVERABLES

SECTION VI. 
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
AND INDEMNIFICATIONS

assessments, judgments (collectively, “Losses”), incurred by such Purchaser Indemnitee and resulting from, arising out of or related to:

quasi‑criminal proceeding, action, indictment, allegation or investigation of the Indemnifying Party; the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnitee in each jurisdiction for which the Indemnitee reasonably determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnitee in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnitee may, subject to Section 6.5(b), pay, compromise, or defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Seller and Purchaser shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including (subject to reasonable privilege and confidentiality concerns) making available records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

respect of the Direct Claim and the Indemnitee shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to Seller’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such thirty (30) day period, the Indemnifying Party shall be deemed to have accepted such claim.  If the Indemnifying Party timely rejects all or any part of such claim, the Indemnitee shall be free to pursue such remedies as may be available to the Indemnitee on the terms and subject to the provisions of this Agreement.

and fraud committed by Seller or Seller Principal, for which Seller’s and Seller Principal’s liability shall be unlimited.

SECTION VII. 
COVENANTS AND AGREEMENTS

thereto, and (b) the amount, if any, of any commissions which will be due and payable to any Seller’s employees hired by Purchaser after the Closing for business obtained prior to the Closing Date, in accordance with Seller’s policies with respect thereto.  For the purposes of this Agreement, “COBRA” shall mean health insurance continuation coverage as required by Section 4980B of the Code and Sections 601 through 609 of ERISA or as required by any applicable state Law.

(i)	such use or disclosure is for or to (A) the Purchaser, (B) any Affiliate of the Purchaser, or (C) any Person, at the request of the Purchaser or on the Purchaser’s behalf; or

(ii)

such information (A) becomes generally available to and known by the public after the Closing Date through no fault of Seller or any of its Affiliates or Representatives, or (B) is lawfully acquired by Seller or Seller Principal after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation.

If Seller or any of its Affiliates or Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, Seller shall promptly, upon receiving notice of such compelled disclosure, notify the Purchaser in writing and shall cooperate with the Purchaser’s attorney in obtaining any available protective orders.

(i)

engage in any business, owned by (A) Seller or any of Seller’s Affiliates, (B) any spouse, former spouse, or any immediate family member of any such spouse or former spouse of Seller Principal, including without limitation Tanya Bautista or Ed Lassman, or (C) any immediate family member of Seller Principal, that competes with the Business anywhere in the United States;

(ii)

cause, solicit or encourage any actual or prospective client, customer, distributor, vendor, supplier or licensor of Purchaser, including without limitation, any of the Customer Accounts included in the Purchased Assets, or any other Person who has a business relationship with Purchaser, to terminate or diminish any such actual or prospective relationship with Purchaser; or

(iii)

recruit, offer employment to, employ, engage as a consultant, or in any other manner persuade or attempt to persuade, any employee of Seller who is hired by Purchaser at Closing or employee of Purchaser or any of Purchaser’s Affiliates to leave the employment or engagement of Purchaser or any of its Affiliates; provided, that nothing in this Section 7.3(b)(iii) shall prevent Seller or Seller Principal from making solicitations for employment to the public or the industry generally through advertising that is not specifically targeted at employees of the Purchaser.

For the avoidance of doubt, providing consulting services to payroll service and other human resource management service companies shall not be considered competing with the Business.

unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

endorse with the name of Seller any checks, drafts or similar instruments received with respect to any of the foregoing. From and after the Closing Date, Seller shall promptly remit to Purchaser, all amounts, and endorse or remit to Purchaser the proceeds of all checks, drafts, notes, or other documents, received by Seller that should have otherwise been paid to Purchaser.

(a) Purchaser will provide Seller Principal with on-going shared and monitored access to the books and records related to the Business; and each party will, during normal business hours and upon reasonable notice from any requesting party cause such requesting party and such requesting party’s Representatives to have reasonable access to the books and records of such party related to the Business, and to the personnel responsible for preparing and maintaining such books and records, if available: in each case to the extent necessary to (A) defend or pursue any Action, (B) defend or pursue indemnification matters hereunder, (C) prepare or audit financial statements, (D) prepare or file Tax Returns; or (E) address other Tax, accounting, financial or legal matters or respond to any investigation or other inquiry by or under the control of any Governmental Authority;

(b) each party will permit such requesting party and such requesting party’s Representatives to make copies of such books and records for the foregoing purposes, at such requesting party’s expense; and 

(c) each party will maintain and preserve such party’s books and records at such party’s expense.  If requested by the other party, the requesting party will provide reasonable substantiation of such requesting party’s purpose for such access to show that such access is for any of the foregoing purposes.

complete copy of the filings with the applicable Governmental Authorities showing that such name changes occurred.  Except the the extent otherwise provided in the Transition Services Agreement, after the Closing, neither Seller or any of Affiliate of Seller will use the name “Payroll Specialties N.W.” or any derivation thereof, or any word or phrase that could reasonably be expected to imply any affiliation with Purchaser or any Affiliate of Purchaser, including on letterhead or other correspondence, employee business cards, accounts or signage.

SECTION VIII. 
MISCELLANEOUS

party may make service of process on the other party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 8.5. Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and therefore, each party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

Asure Software, Inc.

110 Wild Basin Road, Suite 100

Austin, Texas  78746

Attention:  CEO

Email:  pgoepel@asuresoftware.com

With a copy (which shall not constitute notice) to:

Messerli & Kramer P.A.

100 South Fifth Street

1400 Fifth Street Towers

Minneapolis, MN  55402

Attention:  David Weigman, Esq.

Email:  dweigman@messerlikramer.com

 

 

Payroll Specialties N.W., Inc.

1511 McLean Blvd.

Eugene OR 97405

Email:  shawn.g@psnw.us

With a copy (which shall not constitute notice) to:

Tonkon Torp LLP

888 SW 5th Ave

1600 Pioneer Tower

Portland, OR 97204

Attention: Gwen Griffith

E-mail:  gwen.griffith@tonkon.com

or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.

[Signature Page Follows]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

PURCHASER:

ASURE SOFTWARE, INC.

By:                                                                           

Name: Patrick F. Goepel

Title: Chief Executive Officer

SELLER:

PAYROLL SPECIALTIES N.W., INC.

By:                                                                           

Name: Shawn Gregg

Title: President

SELLER PRINCIPAL:

Shawn Gregg, individually

 

[Signature page to Asset Purchase Agreement]